Cyber startup Island hits $6.4 billion valuation in new round as AI attacks fuel spending wave

The scramble to secure businesses against swarms of rogue artificial intelligence agents is fueling demand for new security tools.

The latest beneficiary of that trend is Dallas-based browser security startup Island, which announced a $400 million funding round at a $6.4 billion valuation on Thursday.

"Every old control is breaking, so everything's up for grabs," Island CEO and co-founder Mike Fey told CNBC in an exclusive interview. "I've never seen anything like it. It's a very special time."

The round, led by Evolution Equity Partners, comes as the battle over AI regulation rages in Washington and Silicon Valley, and lawmakers on both sides of the aisle debate a development slowdown.

At the same time, businesses are racing to roll out stronger defenses to stave off rogue AI agents, which have drawn widespread attention following OpenAI's agent-orchestrated attack on Hugging Face.

Island plans to invest in research and development and power its expansion into new markets, including Europe, Asia and the Middle East. Fey also said the company plans to scale its workforce from 1,000 to 1,500 employees by the middle of next year.

Island, which ranked No.28 on this year's CNBC Disruptor 50 list, counts Pfizer, Chipotle, American Airlines and major banks among its growing list of customers.

The company is widely known for its enterprise browser that allows businesses to monitor and control browser activity as employees collaborate. Browsers have become a common target of hackers looking to steal sensitive information, especially in hybrid work environments.

"What we're focused on is enabling everything required for safe, secure, and productive capabilities for the future workforce," Fey said.

Island is also navigating an increasingly crowded competitive landscape that includes pure-play incumbents such as Palo Alto Networks and a roster of startups racing to win a slice of the ballooning AI security market.

That's complicating an already complex business stack and forcing businesses to rethink their architecture, Fey said.

Instead, Island is betting that its broad platform and nimble startup-like feel will appeal to businesses looking to boost productivity and simplify their toolset.

"It's really simple: Have a much better product," Fey said. "That's your only option, and that's what we've done.